This case involved a lease between the City of Lebanon and Signal Aviation Services. Signal leased a portion of the Lebanon Municipal Airport, owned by the city, under a Lease and Operating Agreement (LOA), which gave Signal nonexclusive rights to operate at the airport. There were three other tenants at the airport in addition to Signal, and the city also operated an executive ramp on a portion of the airport property. The LOA between Signal and the city provided that any other operator at the airport would not be allowed to operate under “rates, terms, or conditions which are more favorable than those” set forth in the LOA. The LOA also explicitly required Signal to pay property taxes.
Signal brought this lawsuit against the city on multiple grounds, but the focus of the Court’s decision was Signal’s argument that the city’s exemption from taxes on the property constituted unequal treatment. The New Hampshire Supreme Court determined that the city was an “operator” under the terms of the LOA: by operating the executive ramp, the city was conducting “aeronautical endeavors or activities” at the airport. Therefore, under the terms of the LOA, the city was, like Signal, subject to the same rates, terms, or conditions when operating at the airport.
However, this did not mean, as Signal argued, that the city’s failure to pay taxes violated the agreement. Under RSA 72:23, I(a), land and buildings owned by a municipality are exempt from taxation unless provided otherwise by statute. Furthermore, RSA 72:23, I(b) requires a municipality to provide for the payment of property taxes when executing an agreement to lease municipal property. Contrary to Signal’s assertions, the city, therefore, had no power to contract with Signal to not tax the leased property; such an agreement would be illegal under state law.